- •3. Difference between micro and macro economics.Role of economists in making policy
- •4 . Absolute advantage and comparative advantage.
- •5. How comparative advantage explains the gains from trade
- •6.The meaning of market. Determine the characteristics of competitive market
- •7.Describe a type of market that is not perfectly competitive
- •8.Determine the demand for a good in a competitive market.
- •14.Explain the relationship between total revenue and the price elasticity of demand
- •11.Describe the role of prices in market economies
- •12.The meaning of the elasticity of demand.Determine the elasyicity of Demand
- •13.Explain the ways of computing the price elasticity of demand
- •15.Explain the meaning and types of the elasticityof Supply. Determine the elasticity of Supply
- •17. Describe the different types of controls on prices. Give the real world examples of these two kinds of price controls.
- •18. Explain how price ceilings affect market outcomes. Draw the graphs.
- •19. Explain how price floors affect market outcomes. Draw the graphs.
- •21. The meaning of tax. Explain how taxes on buyers affect market outcomes.
- •22. How does elasticity affect the burden of a tax? Justify your answer using supply-demand diagrams.
- •24. Explain how to define and measure producer surplus.
- •25. Using a demand-supply diagram, explain and identify the following areas:consumer surplus, producer surplus, total surplus.
- •26. The meaning of total surplus in a market, and describe why might it be a good measure of economic well-being. Using a demand-supply diagram, show the areas representing total surplus
- •27. Name two types of market failure. Explain why each may cause market outcomes to be inefficient
- •28. Explain how taxes reduce consumer and producer surplus.
- •29. The meaning and causes of the deadweight loss from a tax.
- •30 Describe why some taxes have larger deadweight losses than others. Explain how tax revenue and deadweight loss vary with the size of a tax.
- •31. Explain the Laffer curve and supply-side economics.
- •32. Explain what determines whether a country imports or exports a good.
- •33. Explain who wins and who losses from international trade.
- •37The meaning of tariff. Describe its economic effects.
- •39Determine the arguments people use to advocate trade restrictions.
- •40 Describe what happens to the gains from trade when a tax is imposed.
- •42 Describe why externalities can make market outcomes inefficient. Use the graphs to explain.
- •43 The types of private solutions to externality. Define the Coase theorem.
- •44. Determine why private solutions to externalities sometimes do not work
- •45. Identify the various government policies aimed at solving the problem of externalities
- •46. Describe the different kinds of goods, and give an example of each
- •47. The importance of free-rider problem. Explain why private markets fail to provide public goods.
- •Implicit Costs
- •53.Explain the various measures of cost. Give the meaning of average total cost and marginal cost and explain how they are related.
- •Variable Costs
- •54 Describe the relationship between short-run and long-run costs
- •55. Explain how competitive firms decide when to shut down production temporarily and how competitive firms decide whether to exit and enter a market?
- •56. Explain why some markets have only one seller. Describe how a monopoly determines the quantity to produce and the price to charge.
6.The meaning of market. Determine the characteristics of competitive market
A market is a place which allows the purchaser and the seller to invent and gather informations and lets them carry out exchange of various products and services. In other words the Meaning of Market refers to a place where the trading of goods take place. The place can be a market place or a street market.
A perfectly competitive market has the following characteristics.
(i) The market consists of buyers and sellers who are price takers.
(ii) Each firm in the market produces undifferentiated and homogenous products.
(iii) Buyers and sellers have perfect information about the price prevailing in the mark! About the availability of commodities at any given point of time.
(iv) Firms can enter or exit the market freely.
7.Describe a type of market that is not perfectly competitive
Imperfect competition is a term used to describe a market in which the conditions which characterize perfect competition are not present. In the real world, it is virtually impossible to achieve the goal of perfect competition, in which no one force has the power to manipulate the market. As a result, most markets around the world exhibit characteristic of imperfect competition. Some examples of markets which could be considered examples of this type of market include: oligopoly, monopolistic competition, monopoly, and monopsony.
In this type of market, consumer costs for products do not approach the cost of production due to the fact that pricing is controlled to some extent by sellers and the activities of buyers. There are a number of factors which can lead to imperfect competition, and it is not uncommon to see multiple factors involved in a single market.
8.Determine the demand for a good in a competitive market.
In a perfectly competitive market the marketHYPERLINK "https://www.boundless.com/economics/definition/market-demand" HYPERLINK "https://www.boundless.com/economics/definition/demand-curve"demandHYPERLINK "https://www.boundless.com/economics/definition/demand-curve" HYPERLINK "https://www.boundless.com/economics/definition/demand-curve"curve is a downward sloping line, reflecting the fact that as the price of an ordinary good increases, the quantity demanded of that good decreases. Price is determined by the intersection of market demand and market supply; individual firms do not have any influence on the market price in perfect competition. Once the market price has been determined by market supply and demand forces, individual firms become price takers. Individual firms are forced to charge the equilibrium price of the market or consumers will purchase the product from the numerous other firms in the market charging a lower price (keep in mind the key conditions of perfect competition). The demand curve for an individual firm is thus equal to the equilibrium price of the market .
The demand curve for an individual firm is equal to the equilibrium price of the market. The market demand curve is downward-sloping.
The demand curve for a firm in a perfectly competitive market varies significantly from that of the entire market.The market demand curve slopes downward, while the perfectly competitive firm's demand curve is a horizontal line equal to the equilibrium price of the entire market. The horizontal demand curve indicates that the elasticity of demand for the good is perfectlyHYPERLINK "https://www.boundless.com/economics/definition/perfectly-elastic" HYPERLINK "https://www.boundless.com/economics/definition/elastic"elastic. This means that if any individual firm charged a price slightly above market price, it would not sell any products. 10 Define the equilibrium of a market. Describe the forces that move a market toward its equilibrium.
Market equilibrium is the price level in which the quantity demanded is equal to the quantity supplied, so that consumers can buy all of the product or service that they want at that price, and producers will be willing to supply exactly as many of the product or service that the consumers want. If the market is out of equilibrium, either a shortage or a surplus will exist: the price will be either too high or too low for quantity demanded to equal quantity supplied. If the price is too high, the quantity supplied will be higher than the quantity demanded. A surplus will exist. Producers will not be able to sell all of the product that they produce at that price; they will realize that in order to sell what they produce, they will have to lower the price. Once the price is lowered to equal the equlibrium price, the market will be back in equilibrium. If the price is too low, the quantity demanded will be higher than the quantity supplied. A shortage will exist. Consumers will not be able to get all of the product or service that they want at that price, and producers will run out of inventory before consumer demand is met. With depleted inventories, producers will realize that they can still sell what they produce at a higher price; consumers would be willing to pay more per unit if it means that supplies are more readily in stock. Once the price is raised to equal the equilibrium price, the market will be back in equilibrium.